7 July, 2004
Preliminary Results for the year ended 30 April 2004
Read and download the preliminary results for the year ended 30 April 2004
Audited preliminary results for the year ended 30 April 2004 and unaudited fourth quarter results
- 42% growth in Sunbelt’s full year divisional operating profit* to $73.3m (2003 - $51.5m) reflecting improved operating conditions in the US. Sunbelt’s fourth quarter profit was $20.2m (2003 - $3.0m)
- A-Plant’s full year divisional operating profit* reduced to £4.0m (2003 – £7.9m) reflecting difficult trading during its refocusing programme which was completed in January. Since then its fourth quarter profit improved to £1.5m (2003 – loss of £2.4m)
Full year Group EBITDA before exceptional items of £147.0m, up 4% at constant exchange rates. Fourth quarter EBITDA on the same basis of £35.0m, up 45% at constant rates
Full year Group profit before exceptional items, goodwill amortisation and tax of £7.6m (2003 - £1.8m loss). For the fourth quarter, the profit on the same basis was £3.1m (2003 - £10.6m loss)
Full year loss before tax of £33.1m (2003 - £42.2m loss) and after tax loss per share of 10.8p (2003 – 10.3p loss per share) reflecting goodwill amortisation of £9.2m and exceptional charges of £31.5m. Of these, £20.6m related to one time refinancing costs and the balance was mostly non-cash
Net free cash inflow** for the year of £56.6m up 46% from £38.9m in 2003
Net debt*** at 30 April of £526.7m, £95.6m lower than last year’s £622.3m. At constant exchange rates, net debt reduced by £53.6m in the year.
*divisional operating profit is defined as the operating profit before exceptional items and goodwill amortisation of our divisions
**net cash inflow from operating activities before exceptional items, less interest paid, net capital expenditure and tax
***debt plus non-recourse funding received under the account receivable securitisation less cash at bank and in hand
Further details of these performance measures are given in the section on supplemental financial information.
Ashtead’s chief executive, George Burnett, commented:
"The Group has made significant progress in the past year. Financial stability has been achieved through the extension of our banking facilities to September 2007 and the issue of our ten year bond. Sunbelt, our US business, achieved divisional operating profit growth in dollars of over 40% and continued to take market share in improving trading conditions. Following the completion of its refocusing programme in January 2004, we have seen encouraging signs of an improvement in the trading performance of A-Plant, our UK business. We are looking to build on this momentum in the coming year."
The Group closed its year to 30 April 2004 with a strong last quarter performance. Operating profit before exceptional items and goodwill amortisation for the quarter was £12.0m compared with a loss of £0.8m in the previous year and the profit before exceptional items, goodwill amortisation and tax for the quarter was £3.1m (2003 - loss of £10.6m). There were particularly encouraging figures for both Sunbelt Rentals, the Group’s US division, where dollar revenues grew by 13.8% and divisional operating profits increased from $3.0m to $20.2m (£1.8m to £11.0m in sterling terms) and for A-Plant whose divisional operating profit was £1.5m compared with a loss of £2.4m in the previous year.
For the full year to 30 April 2004, Group profits before exceptional items, goodwill amortisation and tax were £7.6m (2003 – loss of £1.8m). At constant exchange rates profits would have been 33.5% higher at £10.1m. Turnover before exceptional effects, which declined by 1.6% at constant exchange rates, was further reduced at actual exchange rates by the weakness of the dollar to £500.3m (2003 - £539.5m), a 7.3% decline.
The Group, which started the year in default with its bankers, ended with the achievement of financial stability through the closing of our ten year bond issue in April and the extension of our facilities with existing banks until the end of September 2007. Significant exceptional costs were incurred in this process contributing to the FRS 3 loss before tax of £33.1m (2003 - £42.2m loss).
Review of trading
|Turnover*||EBITDA*||Divisional operating profit**|
|Sunbelt Rentals in|
|Sunbelt Rentals in|
|Group central costs||-||-||(4.7)||(4.2)||(4.9)||(4.2)|
*before exceptional items
**operating profit before goodwill amortisation and exceptional items
Sunbelt enjoyed a strong recovery in the year with dollar revenues up $25.8m or 4.7% to $572.8m. Tight control of costs maximised the benefits of operational gearing so that $21.8m of the increased revenue fell to the bottom line. As a result divisional operating profit was up 42.3% to $73.3m (2003 - $51.5m).
Although the weakness of the dollar transformed the 4.7% increase in dollar revenues into a 4.6% decline in sterling, divisional operating profits in sterling were still up 28.9%. EBITDA margins improved from 28.4% to 30.9% and operating margins from 9.4% to 12.8%.
Utilisation levels, which in the first half had trailed the previous year, averaged 65.1% for the year as a whole, compared with 64.5% in the previous year, thanks to a strong last quarter. Rental rates improved with an estimated uplift of 4% for the year as a whole. As the year progressed and the US economy strengthened there was also evidence of accelerating recovery in the non-residential construction market, Sunbelt’s principal customer base, and in the equipment rental market itself. This coupled with improved utilisation and pricing produced year on year growth in total quarterly revenues of –1.0%, +3.2%, +4.0% and +13.8% over the four quarters indicating that Sunbelt continued to take market share.
Capital expenditure in the year was kept under tight control, with fleet investment being largely matched with disposals in a market where improving second hand pricing gave further evidence of economic recovery. There were three new profit centre openings in the year bringing the total number to 200.
As separately announced today following the strong profit performance in Sunbelt, Cliff Miller has been appointed President and Chief Executive and Brendan Horgan Chief Operating Officer, allowing George Burnett the Group chief executive, who has also been acting CEO in the United States, to return to the UK.
For A-Plant the past year was one of transition as its business refocusing programme was completed. Three non-core activities were disposed of – Mast Climbing, Big Air and its businesses in Ireland. In addition the final stages of the move from five geographic regions to three product focused divisions, Main Plant, Specialist and Tool Hire Shops, was put in place. These changes, coupled with the network rationalisation begun in 2003 under which over 20 profit centres have been closed, contributed to a 12.6% decline in turnover to £155.9m. Same store turnover was down 5.3% in the year. Costs excluding exceptional items and amortisation were reduced by 10.9% so that the £22.5m turnover decline was restricted to a £3.9m reduction in divisional operating profit to £4.0m.
A-Plant enjoyed a much improved fourth quarter. Same store turnover was almost in line with last year (down 0.9%) and utilisation rates, which for the year as a whole averaged 59.9% compared with 60.7% in the previous year, were 63.6% in the last quarter, significantly above the comparable 2003 figure of 59.6%. As mentioned above, divisional operating profit for the quarter was £1.5m (prior year loss £2.4m).
Ashtead Technology – Offshore and Environmental
Ashtead Technology achieved an 8.0% improvement in its divisional operating profit in the year to 30 April 2004 despite difficult trading in many of its markets. Tight cost controls saw operating margins increase to 23.9% from 20.8% in 2003. The US businesses, both offshore and environmental, saw growth in the year and a new environmental profit centre was opened in the San Francisco area. Since the year end the first such business in the UK has been opened in Hitchin and there are further planned openings in Atlanta and Chicago in the coming twelve months.
Interest and exceptional items
Interest costs before exceptional items declined to £36.6m (2003 - £40.9m) reflecting lower average borrowings and the weakness of the US dollar. Exceptional items totalled £31.5m and principally related to costs incurred in connection with the extension of the maturity of the Company’s senior debt facilities.
The Group continued to generate strong cash flow. Net free cash inflow for the year (as defined) was £56.6m up 46% from £38.9m in the previous year. Net debt was reduced by £95.6m reflecting this cash generation and the weakness of the dollar. At constant exchange rates the reduction was £53.6m.
Capital expenditure during the year was reduced in line with market conditions. The total for the year was £72.3m (2003 - £85.5m) of which £64.1m (2003 - £71.0m) was spent on the rental fleet. It is anticipated that capital expenditure in the coming year will rise to approximately £100m, in line with the depreciation charge. The average age of the Group’s fleet at 30 April 2004 was 46 months (43 months in the UK and 48 months in total for the US but, when the longer-life aerial work platform fleet is excluded, the average fleet age for the rest of the US fleet reduces to 35 months). Profits on disposal of fixed assets were £6.2m up from £3.0m in the previous year.
Current trading and outlook
The improving turnover performance, seen in the last quarter of the financial year, continued in the months of May and June. Sunbelt’s dollar revenues grew 10.9% while A-Plant achieved like for like growth of 2.4%.
While a further weakening of the US dollar and the prospect of higher interest rates could have some negative impact, the Board is encouraged by the improving trends in its businesses and in the markets in which they operate, and believes that further progress should be achieved in the coming year.
There will be a presentation today to equity analysts at 9.30am at the offices of JPMorgan at 60 Victoria Embankment, London EC4 (entrance on John Carpenter Street). A simultaneous webcast of the meeting and a copy of the slides will be available through the Company’s website, www.ashtead-group.com. A recorded playback will also be available shortly after the meeting.